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Chase Sapphire Reserve or Preferred? Privilege Wins
What credit card should you get? This is the most common question I receive. This question is popular with friends, family, and members of our Facebook group. This is the most common question asked by people who are just starting out. Because of the Chase 5/24 rule, almost everyone agrees that Chase cards should be used to start. They disagree on whether to start with the Chase Sapphire Reserve or the Chase Sapphire Preferred.
Updated 8/24
This post has aged beautifully, just like fine wine. Although people thought that I was crazy for publishing this post a few years back, I did share numbers explaining why it made sense. Now everyone is on board. All numbers have been updated to reflect the new offers and perks on the cards.
Why not start with Chase Cards?
Many people who are into the points and miles hobby recommend starting with Chase due to the complicated Chase 5/24 rule. Chase products are no longer available after you have submitted 4 applications to any bank. Most people recommend that you apply for Chase cards your first time. This will ensure that you don't regret it later.
Chase is a strong focus because Ultimate Rewards is one of the most sought-after points in the hobby. Chase offers a great rewards program and has one of the most trusted transfer partners, Hyatt. Bethany's guide to the program will provide more information.
We understand that Chase is your first choice and you need to earn Ultimate Rewards points. So which card should I get? People have been telling you for a long time to get the Chase Sapphire Reserve. They are, at the very least, wrong.
Click HERE to see a comparison of this card and other travel credit cards.
Refresh Details for Chase Sapphire Products
Both the Reserve and Sapphire Preferred cards were recently updated by Chase. While the Reserve saw minor improvements, the Sapphire Preferred received some significant upgrades.
Chase Sapphire Preferred
Here's what Chase Sapphire Preferred looks like
Spend $4,000 in the first three months to earn 100,000 Ultimate Rewards points.
$50 Hotel Credit per Cardmember Year (must Book through Chase Travel).
The card's earning structure is: Chase Travel 5X, Chase Dining 3X, Select Streaming, Online Groceries (excludes Target, Walmart, & Wholesale Clubs) 2X travel 1X for everything else
You will also receive a 10% anniversary bonus in points. After you renew your card and pay an annual fee, this bonus will be available. This is calculated based on how much you spend on your card. If you spend $25,000 per year, you will get 2,500 points.
Annual fee $95
Chase Sapphire Reserve
Here's what Chase Sapphire Reserve looks like
Spend $4,000 in the first three months to earn 60,000 points
The card's earning structure. Chase Dining (almost worthless), Hotel and Car Rental Purchases through Chase Travel. Chase Travel offers 5X off airline tickets
$300 travel credit
$60 DoorDash credit (may expire in 2022).
Every 5 years, $100 Global Entry Credit
Annual fee $550
Chase Sapphire Reserve or Preferred: The Numbers
Analyzing is a great way to make a decision. Let's compare the numbers.
Numbers for Cash Out / Simplicity Lovers
This section is for those who want to cash out points via Pay Yourself back or book cash travel through this travel portal.
Chase Sapphire Reserve:
Annual Fee $550 -$300 Travel Credit –$60 DoorDash Credit $190 Net Cost
Welcome Offer: 60,000 points with 1.5 Cent Cash Out Option via Pay Yourself Back Cash value $900
The Sapphire Reserve has a positive value at $710 per year. This excludes the Global Entry credit and lounge access. If you value these items, add them to the equation.
$95 Annual Fee (it might still be possible to receive a no-annual fee offer in branch). $25 Yearly Hotel Credit (it is $50 credit that I value as 50%) $70 Net Cost
It is possible to still get a branch offer for no annual fee. 100,000 points welcome offer with 1.25 cent cashout option via Pay Yourself back $1,250 cash value
The Sapphire Preferred has a positive value at $1,180 per year. Or, $470 more than the Sapphire Reserve. Decide for yourself whether the Global Entry credit, lounge access and lounge access are worth more than $470. If yes, then get the Sapphire Reserve. If no, grab the Sapphire Reserve.
Numbers for Travel Partner Lovers
What if you want to use valuable partners such as United, Hyatt or Chases' newest arrival, Aeroplan
This would mean that redemptions would be on equal footing at 1.5 cents per piece. This widens the gap. The Sapphire Reserve is unchanged, with a net positive in year one of $710. This is how the Sapphire Preferred would look with the changes.
Chase Sapphire Preferred
$95 Annual Fee (it might still be possible to receive a no-annual fee offer in branch). $25 Yearly Hotel Credit (it is $50 credit that I value as 50%) $70 Net Cost
It may still be possible for a branch to offer a no-annual fee offer. 100,000 points welcome offer. 1.50 value per point. This offer is available to travel partners. $1,500 travel value
In year one, the Sapphire Preferred has a net positive value of $1,430. This is $720 more than the Sapphire Reserve. There aren't enough lounge drinks around the world to make up that gap, I don't think!
Click HERE to see a comparison of this card and other travel credit cards.
How about remunerating yourself with current points?
Pay yourself back is another option to think about. This feature earns the CSR 1.5 cents per points compared to 1.25 cents for the CSP. This can make a significant difference. To make up the $720 difference, you'd need to redeem 288,000 points. This number can be obtained if you have enough Ultimate Rewards points. This is not something that you should consider if you're just getting started with Ultimate Rewards. This offer is not valid beyond September 2021.
What about after the first year?
The waters get murkier after the second year. This is because the $180 difference between annual fees and credits is easier to bridge. If Chase extends or replaces the DoorDash credit by something, it gets even smaller. Lounge access can play an important role in your decision-making if you travel frequently or for work. Amex has increased the fees for the Amex Platinum. This is especially appealing if you already have Priority Pass restaurants at your airport, or frequent them often. These have been dropped by Amex.
The upgrade to the Reserve after each year has been made less certain by increasing the Sapphire Preferreds dining earn rates to 3X. While the Reserve has better travel insurance and earns 3X per $1 on travel, it is still more expensive than the Preferred. However, dining is an important expense for many. After the first year, the gap between the cards is even smaller.
Chase Sapphire Preferred or Reserve Final Thoughts
It was a good idea to sign up for Chase Sapphire Preferred in year 1, and then upgrade to Chase Sapphire Reserve in year 2. It will still make sense for road warriors or those who prefer better travel insurance. However, I don't think many people will continue to do this. Priority Pass can be obtained from any card, so you don't need to upgrade after the first year. I don't think the value is sufficient to make up the difference to the Sapphire Reserve.
Enjoy Your Cake and Eat It!
I have another option for those who stayed on the sidelines. This option may allow you to have your cake AND eat it, too. You can't sign up for either Sapphire product while you have the other. However, you can upgrade to a second Sapphire product.
If you sign up for the Sapphire Preferred to receive the enhanced welcome offer, you can then upgrade another card to a Sapphire Reserve. You would need to be a Chase Freedom card holder and have it for at least one year.
You will be able to receive the 100,000 points welcome offer and the enhanced value of pay yourself back, as well as all the perks that come with the Sapphire Reserve. It takes some time for the annual fee for the Reserve card to be billed after upgrading, which can provide a little more value.
